EU Takes Steps to Secure a Sustainable Supply of Critical Raw Materials

The European Commission has recently announced a set of measures to secure a sustainable supply of critical raw materials. These materials are essential for various strategic sectors, including the net-zero industry, digital industry, aerospace, and defence. The move comes as Europe heavily relies on imports, often from a few quasi-monopolistic (a few large suppliers, but little competition) third-country suppliers. This exposes the region to supply chain risks that can harm Europe's economic resilience.

The Commission's proposed actions aim to mitigate these risks and enhance Europe's economic resilience by diversifying and strengthening the EU's critical raw materials supply chains. The proposed measures include setting clear priorities for action, creating secure and resilient EU critical raw materials supply chains, investing in research, innovation, and skills, and improving the circularity and sustainability of critical raw materials.

The Need for Critical Raw Materials

Critical raw materials are vital to the functioning of the modern economy. Examples of critical raw materials include rare earth elements, lithium, and cobalt, and these materials are essential to a range of industries, including renewable energy, electric vehicles, and electronics. 

As you can imagine, the growing demand for these materials has led to concerns over the security and sustainability of their supply. Many of these materials are produced in a limited number of countries, creating a high dependency on imports. This dependency exposes countries to supply chain risks, such as price volatility and geopolitical tensions.

The Commission's Proposed Measures

So, which steps are the Commission taking? To reduce Europe's dependency on imports and promote the development of domestic capacities, the proposed regulation aims to set clear benchmarks for domestic capabilities along the strategic raw material supply chain, diversify EU supply by 2030, and reduce the administrative burden and simplify permitting procedures for critical raw materials projects in the EU. Moreover, the proposal provides for monitoring essential raw materials supply chains and coordinating strategic raw materials stocks among Member States.

The proposal also recognises the importance of investing in research, innovation, and skills to strengthen the uptake and deployment of breakthrough technologies in critical raw materials. The proposal aims to establish a large-scale skills partnership on critical raw materials and a Raw Materials Academy to promote skills relevant to the workforce in critical raw materials supply chains.

In a nutshell, the EU aims to sustainably promote their economic development while promoting secure, resilient, affordable, and sufficiently diversified value chains for the EU.

The Importance of Sustainability and Circular Economy

The proposal also aims to improve the circularity and sustainability of critical raw materials. This includes measures to promote the recycling and reuse of essential raw materials, reduce waste and environmental impact, and ensure the responsible sourcing of materials.

Improving the sustainability and circularity of critical raw materials is essential for reducing the environmental impact of their extraction and production. It also contributes to the EU's broader sustainability objectives, such as reducing greenhouse gas emissions and promoting resource efficiency.

Challenges Ahead

While the proposed measures are a step in the right direction, there are several challenges that the EU will need to overcome to secure a sustainable supply of critical raw materials. These include:

Competing Demands

There are competing demands for critical raw materials from various industries. Balancing these demands while ensuring a sustainable supply will be a significant challenge.

Environmental Concerns

The extraction and production of critical raw materials can have significant environmental impacts, such as water pollution and habitat destruction. Ensuring responsible sourcing and reducing environmental impacts will be critical to achieving a sustainable supply.

Geopolitical Tensions

The production of critical raw materials is often concentrated in a few countries, creating high import dependency. This dependency exposes countries to supply chain risks, such as price volatility and geopolitical tensions.

How will these risks be addressed?

The EU's proposed measures aim to address these risks by diversifying and strengthening the region's critical raw material supply chains. Specifically, the proposal sets clear priorities for action, creates secure and resilient EU critical raw materials supply chains, invests in research, innovation, and skills, and improves the circularity and sustainability of critical raw materials. 

To achieve these goals, the proposed regulation sets clear benchmarks for domestic capabilities along the strategic raw material supply chain and aims to diversify EU supply by 2030. The proposal also emphasises the importance of investing in research, innovation, and skills to strengthen the uptake and deployment of breakthrough technologies in critical raw materials. Establishing a large-scale skills partnership on critical raw materials and a Raw Materials Academy is proposed to promote skills relevant to the workforce in critical raw materials supply chains.

The proposal also recognises the need to diversify the Union's imports of critical raw materials and strengthen global engagement with reliable partners to develop and diversify investment and promote stability in international trade. By working with reliable partners, the EU aims to sustainably promote their economic development while promoting secure, resilient, affordable, and sufficiently diversified value chains for the EU.

Final thoughts

The EU's proposed measures to secure a sustainable supply of critical raw materials are an essential response to the region's heavy reliance on imports from a few quasi-monopolistic third-country suppliers. The proposed regulation aims to diversify and enhance the resilience of EU critical raw material supply chains, reduce the EU's dependency on imports, promote the development of domestic capacities, and ensure a sustainable and diversified supply of essential raw materials to support Europe's transition to a net-zero and digital future.

Furthermore, these proposed measures are a positive step towards securing the supply of critical raw materials and enhancing Europe's economic resilience. By mitigating supply chain risks related to strategic dependencies and enhancing the circularity and sustainability of critical raw materials, the EU can support the growth of its strategic sectors and meet its climate and digital objectives. The EU must invest in research, innovation, and skills to strengthen the uptake and deployment of breakthrough technologies in critical raw materials. Furthermore, it is important to establish a large-scale skills partnership on critical raw materials and a Raw Materials Academy to promote skills relevant to the workforce in critical raw materials supply chains.

I believe that the proposed measures underscore the EU's commitment to promoting a sustainable and diversified supply of critical raw materials to support its transition to a net-zero and digital future. By reducing its dependency on imports and investing in domestic capacities, the EU can enhance its economic resilience and promote a more sustainable and prosperous future for all.

What are your thoughts? Let’s start a discussion on LinkedIn!